Dropshipping is hard because:
- Dropshippers have zero control.
- Profitable dropshipping niches are super competitive.
- Committing to a dropshipping supplier is risky.
- Dropshippers compete against Amazon Prime.
- Dropshippers need a steady stream of traffic to make sales.
In 2024, the competition has increased, but consumer demand has stayed the same. NerdWallet reports that nearly 23% of all online sales are fulfilled by drop shipping. The 77% of sales not fulfilled by dropshipping are driven mainly by industry giants. Now, hundreds of other dropshippers are already selling every single product you want to sell.
So, when you find a hot product, it's too late. It's already been oversold. Drop shipping is also hard because you have to dedicate 10-50 hours per week to social media. Abdalslam states that dropshipping stores with an active online presence on at least one social media platform tend to generate 32% higher revenue.
But there are other reasons why dropshipping is hard, like the rising cost of paid ads and platform bans. Read on to learn why having zero control, going toe to toe against Amazon Prime, unreliable suppliers, competition, and the challenge of getting attention on the Internet make dropshipping so hard and three ways you may be able to make the business model easier.
1. Dropshipping is Hard Because You Have Zero Control.
The ecommerce sales will see a growth of 10.4% in 2023. However, as a drop shipper, you have no control over key aspects of your online store, like supply chain issues, shipping times, and product quality. But the product is everything. You don't have a business if your product isn't good. So, aim for things you can sell for a 300% profit (3x the retailer's price). Then, focus on strategies like:
Research reports that free delivery is still the most convincing purchase driver for online shoppers.
2. Drop Shipping is Hard Because the Profitable Niches are Super Competitive.
The drop shipping industry has grown 3.5x its value since 2020. Experts predict that by 2026, the global market size will be worth nearly $476.1 billion. That's an increase of $347.5 billion in six years. Use tools like Google Trend, SEMrush, and Keywords Everywhere to check out what people are looking for online. Determine things like:
Look at Amazon's Best-Seller list and the top picks on sites like Etsy and AliExpress. What's selling well now? Can you find a similar product? How can you be better than the competition? The goal is to pick an evergreen niche with low levels of competition and high search volume. You also want a niche that offers several products.
Product selection is vital to your success. Go for products with a small history of proof of concept (1,000-5,000 orders on a site like AliExpress and running a few Facebook or TikTok ads). But look for things that aren't saturated. Ideally, the items you pick should be hard to find, trending, have a wow factor, or solve a problem.
3. The Drop Shipping Business Model is Hard Because Committing to a Dropshipping Supplier is Risky.
The old way of sourcing a supplier from China won't work. Slow shipping times and supply chain breakdowns negatively affect your dropshipping business. This leads to high shipping costs. And these factors are some of the fastest ways to get a ton of customer complaints. In fact, research suggests that 66% of online shoppers will purchase from a competitor with multiple shipping options.
Current research suggests that 84% of dropshippers say finding a good supplier is one of the hardest parts of their business. The key is to have multiple suppliers (2-3). Vet each carefully to ensure they can meet expectations. Questions to ask a potential supplier include:
Find pre-vetted suppliers on SaleHoo, Sunrise Wholesale, and Worldwide Brands. Look for a wholesaler with a warehouse where you plan to do business.
PRO TIP:
Source multiple suppliers who live where you do business to avoid running out of inventory, long shipping times, or depending too heavily on a supplier who might be unable to deliver.
4. Drop Shipping is Hard Because You Compete Against Amazon Prime.
Dropshipping companies need to deliver on fast shipping. Your customers aren't going to wait 3-6 weeks for their product when they can go to Amazon and order the same item and get it the next day. Data says that 62% of people expect their customer order to arrive in less than three business days (and include free shipping). You need to be transparent about delivery times.
Offer a better price or higher-quality product. Next, develop a unique selling feature like cost over convenience or sustainable delivery options. Then, focus on customer service. Be proactive if a shopper has issues with shipping or product quality. Offer a free sample or a discount on their next purchase. When you validate your buyer's concerns, you show them that you hear them and care enough to fix the mistake. As a result, you'll drive more online traffic to your store and boost sales.
5. Dropshipping is Hard Because You Need Traffic To Get Sales.
Research suggests that around 62% of Shopify stores are based in the United States. Shopify confirms that 875,000 USA accounts are on the platform and comprises 50% of the total Shopify merchants. Over 4.36 million websites now use Shopify, but this influx of websites means no one will find your store if you don't have a loyal customer base, share valuable content, or run paid ads.
To get attention, be the better marketer. But don't copy other dropshippers. Create your own customized ad copy and make your own videos. Focus on the benefits of the item rather than the features. Develop a WOW factor or twist to your creatives. Do something that grabs people's attention and gets them to watch your video. Then, hone in on your on-site optimization. Most people won't buy from your site the first time, so leverage retargeting with SMS and email marketing to get in front of the right people and make sales.
The level of competition in the dropshipping space has increased. As a result, the market has become increasingly saturated. Now, there's a proliferation of online stores that promote dropshipped products. In 2024, it's getting harder for new stores to stand out and find success. So, dropshippers must be ready to invest time to distinguish their store from the competition.
6 of the Biggest Difficulties Facing Dropshippers in 2024
Forbes reports that the lifespan of most dropshipping products is roughly 60 months. But this means that dropshippers need to find new products to sell when a product becomes saturated. Drop shipping is all about jumping on trends before the market becomes saturated. But products have a short shelf life, so you need to take massive action.
First, learn how to stay one step ahead of the curve. Get as many sales as you can before another dropshipper copies your winning idea and underprices you out of the market. Provide detailed product descriptions and images highlighting your item from several angles. (This method removes doubt-avoidance tendencies). The more detail you provide your online shoppers, the more they will trust what you're selling. Next, develop a strategy to get in front of the right people. Then maximize your marketing efforts with things like:
Paid ads are a chance to reach a broad audience and connect with people who might not find your website otherwise. But ad costs are increasing. Forbes reports that Facebook ad costs have increased by 89%, and TikTok's CPM has increased by 92%. As a dropshipper, make sure you have enough money to run ad campaigns. Track them closely with software like AdRoll or Google Analytics. Then, scale what works and tweak what isn't to get the best POAS.
Dropshippers depend on the massive audience of social media sites like Facebook to help reach a broader market. Poor ad copy, negative reviews, and sub-par products are a fast way to get banned from the platform. Statistics suggest that Facebook removed 67.74% of the content for trademark violations. They also acted further on another two-thirds of the IPs for copyright violations. Dropshippers can avoid bans by following a few guidelines like:
The more your Shopify dropshipping store resembles an actual ecommerce business, the less likely you are to have issues. Ensure your website's functionality is on point and easy to navigate. Then, limit the number of chargebacks you get and stay compliant with PayPal's rules.
PRO TIP:
Consider a payment gateway, such as Stripe, a popular option that often has fewer issues for dropshippers than PayPal. Another option is Chargeflow, which uses AI to address chargebacks on your behalf.
Dropshippers don't have to deal with dead stock. However, because they have zero inventory, it can create the risk of low supply, running out of merchandise, and inventory stability. But when people can't buy items, your dropshipping business loses money. Dropshippers might miss out on lucrative opportunities because their supplier deals with multiple dropshippers selling the same thing, or there are shipping delays or supply chain issues.
The other problem is around seasonal goods. As a dropshipper, your focus should be on evergreen niches. Adding seasonal items is a way to increase revenue. But the key is to follow buyer trends. For example, the average consumer starts shopping for back-to-school purchases as early as July and buys swimwear in January. Use tools like Google Trends to assess the market. Then, source your inventory from several wholesalers to avoid not having things to sell in your online store.
Dropshippers need to gain their buyer's trust and build a connection. A few ways to improve the shopping experience for your online shoppers include things like:
As a dropshipper, it's so easy for the competition to see your winning product or well-performing ad and copy it. Research shows an increase from 5.16% to 12.82% in the number of Shopify dropshipping stores in the last 12 months. Again, people use the same supplier and get the same images and product descriptions as you. That means you're competing against hundreds (or thousands) of other individuals.
And they're all selling the same item to the same target market. But they can undercut your price and outsell you from the market. To stand out, offer value, and build a loyal customer base. Focus on creating real relationships with people. Use ad copy and creatives that are unique and personalized. Be genuine and transparent. As a result, you'll distinguish your brand from the competition and get more sales.
What Do Dropshippers on Reddit Say About How Hard the Business Model is in 2024?
Dropshippers on Reddit weigh in on the challenges of dropshipping and share their experiences, demonstrating how hard the business model is in 2024. This Reddit user reports that frozen funds on popular platforms like Shopify Pay and PayPal remain a major problem for dropshippers.
"The main issue is when they freeze your funds and say funds will be released once the product is delivered, which is counterintuitive to the whole dropshipping model. These platforms claim to support drop shipping, but they do everything in their power to limit our ability to drop ship".
Other Reddit dropshippers concur that your dropshipping site needs to look professional and sell high-quality products.
"Try harder and create an online store that looks like a reputable brand website and a site you would purchase from."
Ad spend is also an ongoing conversation on the r/dropship forum. Users report that ads are history if you're not spending a 4-digit amount. Now, it's all about the influence.
Can You Lose Money Because Dropshipping is Hard?
Yes, you can lose money because dropshipping is hard. Sadly, this is not a business where you get rich instantly. Dropshippers can face problems connecting with the right customers or sourcing multiple suppliers. Other ways you can lose money with dropshipping include:
- Picking the wrong niche & overspending on product testing
- Customer support issues & negative reviews
- Slow shipping times & supply chain complications
- Account bans & high ad costs
- Payment gateway closures & inventory management problems
Be ready to lose money for at least a year. Keep a close eye on your ad spend. Data suggests that paid advertising costs will rise by 20%-30% this year. And this is one of the leading reasons people quit dropshipping. So take the time to research. Learn as much as you can about your potential customer. Then be ready to pivot fast when things aren't working.
What is the Biggest Reason Dropshipping is Difficult?
A lack of mastery at attracting customers and getting in front of eyeballs or limited knowledge of how to get sales is the biggest reason why drop shipping is difficult. Many inexperienced people start on the Shopify e-commerce platform with a ton of inventory. Unfortunately, they don't take the time to learn the business model. They neglect to research and find a dropshipping product that will sell well.
90% of dropshippers fail in the first thirty days. Research shows that the average success rate of a dropshipping business is between 10% and 20%. Dropshipping takes a lot of work. It takes some savvy business sense, product research, and an understanding of how to read trends.
Others count on one reliable supplier without other options, resulting in logistical issues and a lack of inventory. In addition, you need to trust that the product and packaging are on point. But any mistakes your supplier makes are on you. Unfortunately, you don't control the supply chain, border delays, or customs rules. But what makes drop shipping the most difficult is providing the customer with the best shopping journey possible.
Now, the average consumer is aware of drop shipping. They price check on multiple sites to find the best deal before they buy. Customers also expect fast shipping times. Ware2Go reports that 42% of online shoppers expect a 2-day shipping option, while 33% expect fast shipping times. But the customer has no way to track packages. So dropshippers could face customer service issues, chargebacks, or negative reviews.
Repricer suggests that nearly 23% of all online sales are done via drop shipping. Because the market is competitive, you need to stand out. Develop a unique angle or increase the perceived value of your product. Be the better marketer. Provide people with the best solution to a problem.
Learn as much as you can about your ideal buyer. What kind of content do they consume? What questions are they asking on the Internet? The more you know about your audience, the fewer mistakes you'll make in marketing and ad campaigns. Instead, you can get super-targeted and post copy and creatives that get people to take action.
What are the Biggest Mistakes Dropshippers Make?
These common dropshipping mistakes can lead to low sales and lost customers. To avoid losing money and failing with your dropshipping business, you need to get in front of a ton of people. Then you need to provide them with value. What you share on social media, your website, and paid ads needs to elicit an emotional response from a potential customer. Most dropshippers fail because they don't know how to market effectively or what psychological principles motivate their target market to buy.
Why is Dropshipping Still Worth It Despite the Challenges of the Business Model?
Drop shipping is still worth it despite the challenges of the business model because it's a way to run an online company with minimal risk or cost and make an income using the Internet. First, understand the business model. Then, learn everything you can about your niche and ideal buyer.
Drop shipping is easy to start. But it's not a fast way to make money. Be ready to do the work and commit to treating your online store like a real business. As a dropshipper, you need to test multiple products. But you could lose money before you find something that sells well. Dropshipping is worth it if you do the following:
3 Ways To Make Dropshipping Easier & Earn More Money in 2024
To increase the perceived value of your product, you need to tap into a buyer's emotions. Boost the value of the items you sell by increasing the price, leveraging influencer marketing, or providing stellar customer support.
The goal is to trigger an emotional response that results in an impulse purchase. Start with a website that is easy to navigate. Include high-quality images, chatbot and self-service options, FAQs, and a unified color scheme.
Research states that up to 90% of snap judgments about products can be based on color alone. At the same time, Sweor suggests that 57% of Internet users won't recommend a business with a poorly designed mobile website. You can increase the perceived value of your dropship product and run a successful dropshipping business using techniques like:
- Share social proof like reviews and testimonials.
- Leverage competitor comparisons and show markdowns.
- Create content just for your customers and know what matters to them.
- Build an online community and share value.
- Create scarcity with limited-time offers and FOMO tactics.
- Use charm pricing and emphasize quality.
Post content where your ideal market spends its time and provide your buyer with the best solution to a problem. Data says that 89% of consumers will buy from a brand they follow on social media. 84% will choose that brand over a competitor.
Research confirms that there are 5.3 billion Internet users worldwide as of 2023. That's 65% of the global population who is spending time online. Demand Sage adds that there are 4.90 billion social media users globally, which is set to hit 5.58 billion by 2027. The key to getting attention from the right people is to be the authority in your niche. Then, you can drive a ton of eyeballs to your dropshipping store.
To create a potent Internet presence, research your ideal customer. Learn everything you can about them. Where do they live? How much money do they make? What are their wants and desires? What problems do they have in their lives? Keep your audience at the forefront of your content.
Be genuine with the information you share. Do what you say you're going to do to build trust. Data reveals that 81% of individuals believe social media has raised the bar for business accountability. Keep it personal. Then, post engaging and valuable videos and content on the right platforms. SproutSocial advises that short-form videos (typically less than a minute) grab the attention of 66% of consumers.
It's all about the customer experience. Research says that 70% of the buying experience is based on how the shopper is treated. As a dropshipper, your customer service sets you apart from the competition. Studies report that 61% of consumers would leave for a competitor after just one negative experience. The key is to overdeliver and exceed a buyer's expectations. Personalize the shopping journey and listen to the needs of your customers.
Data shows that 90% of customers are willing to spend more when companies provide personalized customer services. Know your audience and know your product. Get feedback and use it to make changes. Look for ways to improve and consistently deliver value. Statistics confirm that 81% of people claim that good customer service makes them more likely to make another purchase.
3 Reasons People Think Dropshipping is Easy
Dropshipping is a way to test a bunch of products without spending a ton of money. That's why some people think dropshipping is easy. There is minimal risk because you don't need to buy mass inventory or house stock. But the dropshipping business model is time-consuming. As a dropshipper, you should be ready to dedicate 10-50 hours weekly to your online business. Spend the time to:
- Learn the business model.
- Stay current on the latest industry trends.
- Do product research.
- Develop a hyper-targeted marketing strategy.
- Handle customer service issues.
YouTube experts and dropship expounders share screenshots of their revenue and promises on how you can make money with the business model. But a lot of these content creators make more money selling their online courses than they do with drop shipping. Others show you their gross profit margin.
However, they neglect to include associated costs like the product's price, supplier fees, etc. The landscape of e-commerce is changing. And while dropshipping has been a popular business model in the past, it may not be as viable in the future. Other fulfillment methods might become more widespread, or the market could face saturation.
Of course, dropshipping can still be a successful business model, but it's not a get-rich-quick scheme or a fast way to make money. The industry has real challenges, like increased competition and changing consumer preferences. The gurus might be making big bucks. But they've spent hundreds of dollars testing products and thousands more running paid ads, and their journey wasn't easy.
Dropshippers depend on third-party suppliers to take care of packaging, shipping, and delivery of items to your customers. But this means you have no control over critical components of your business. You count on your supplier to sell high-quality products and guarantee fast shipping.
The key is to find a fulfillment provider with the same standards as your brand. One who treats your brand like it's their own. But this can be a challenging undertaking. Shipping things from China to Western markets like the US and Canada is too slow. But a lot of the dropshippers you're in direct competition with use popular platforms like Spocket and AutoDS. And all of them are getting the same information about hot products, ad copy, images, etc. This situation has caused many North America-based dropshippers to quit and elect for other online business ideas in Canada and the US.
If you find a supplier that meets your criteria, you need to be vigilant. Communicate your standards about things like reasonable cutoff times, delivery time (carrier), on-time return handling, customer contact, etc. If your supplier can't deliver, you'll face a ton of returns, refunds, customer service issues, and chargebacks that can destroy your profit margins and even shut down your dropshipping store.
What are the Pros & Cons of Dropshipping?
Pros of Dropshipping
A pro of drop shipping is that it's a way to sell an ecommerce brand without owning products or storing inventory.
A pro of drop shipping is that it's a low barrier to entry online business model, so you don't need experience to start.
Another pro of drop shipping is that dropshippers can sell a broad range of items in their dropshipping store.
The biggest pro of drop shipping is that it's a chance to test products for minimal risk. Once you have a proven concept, you can scale your ecommerce brand through private labels or Amazon FBA.
Cons of Dropshipping
A con of drop shipping is long shipping times and zero control over product quality.
A con of drop shipping is that there is an insane level of competition.
Another con of drop shipping is that, logistically, bundles and upsells don't always work with multiple suppliers.
The biggest con of drop shipping is that the business model procures razor-thin profit margins (10%-30%).
What Percentage of Dropshipping Stores are Profitable?
10%-20% of dropshipping stores are profitable. However, 90% of new dropshipping business owners fail to make money with the ecommerce style fulfillment model. Drop shipping is a way to own an online business and make money on the Internet.
But if you don't understand the business model or can't find a new product that isn't saturated and people want to buy. Or if you can't locate a reliable third-party retailer for order fulfillment, you won't earn sales or an income. For a dropshipper to be profitable, they need to sell things that trigger impulse buys. Data suggests that there are currently 24 million online stores and businesses. 33% use dropshipping for order fulfillment.
It takes testing, failing, and retesting with multiple products to generate a steady income. Facebook and Google ads are a way to get a few fast wins. But paid ads have disadvantages and risks in dropshipping, like platform bans. Have a trustworthy dropshipping store to get in front of the right people.
Next, use psychological principles like scarcity and limited-time offers to get people to take action now. Or offer discounts to increase your average order value. Leverage cross-sells and upsells and focus on retargeting. Then, be ready to spend money on paid ads to drive online traffic to your offers.
Related Dropshipping Articles
- Is Shopify Dropshipping Worth It In 2024?: This article covers the pros and cons of Shopify dropshipping and 3 reasons why you can still make money on the platform in 2024.
- Dropshipping vs Print-On-Demand: This article will provide you an in-depth comparison between dropshipping and POD business.
Why Local Lead Gen is Easier Than Dropshipping
Local lead generation is easier than dropshipping because it offers higher profit margins, lower competition, and more stable revenue. Local lead generation can command margins of up to 90% by using free traffic, while dropshipping typically has margins of 15% to 20% because of high advertising costs. Additionally, local lead generation faces less competition, as it competes with small business owners in specific areas, whereas dropshippers compete globally against major brands and other dropshippers.
With local lead gen, you have full control over every aspect of your business. You own the website, the tracking number, and the leads. You don't rely on a third-party supplier to manage the most critical aspects of your company, like packaging, product quality, or fast shipping times. Local lead generation is about building and ranking simple websites that get to the top of the SERPs. Because the focus is on the local market, you can get your lead generation assets to the top of Google in under six months.
At the top, they produce leads because they're in front of the right people actively searching for the service you offer. Sell those leads to a small business owner for a profit. There are 41,705 unique zip codes in the USA. But each one represents a local market with untapped opportunities. Each lead gen website takes 10-15 hours to build and rank and costs about $500. But once your sites are at the top, they don't need much work.
The beauty of this business model is that you can own more than one website. Each one lets you earn a passive income and a steady stream of cash. Learn the process, and you can scale your business. There's no limit to how much money you can make with local lead generation in 2024.
